APPRAISING THE FUNCTIONALITY OF DIRECTORSHIP IN CORPORATE MANAGEMENT IN A DEVELOPING ECONOMY: THE CASE OF NIGERIA

Abstract

The trite rule underlying the operations of companies is that a company, upon incorporation, has its own legal identity, distinct from that of its shareholders and other stakeholders. Thus corporate purists hold the view that if a company, for instance, is proceeded against for its indebtedness, only the assets of the company can be sequestrated to satisfy the debt of the company pursuant to a judgment. The implication is that if accompany is insolvent, its debts may well go unsatisfied and creditors will take pot luck in the recovery of its loan. The creditors cannot go beyond this to attach the assets of the individual shareholders. This is predicated on the concept of separate legal personality which cloaks corporate veil over the company. The paper is aimed at appraising the functionality of directorship in corporate management. The paper identified the challenges of inappropriate persons being appointed directors, the undefined and steady remuneration schedule of directors, the malfunctioning of multiple directorship, and the presumption of due appointment of a director as the causes of the malfunctioning of directors in the management of companies in Nigeria. It is therefore recommended that relevant provisions of the CAMA dealing with those challenges as discussed above be amended. For instance, clear qualifications of persons to be appointed company directors touching on educational qualification, morality and experience should be stipulated by the CAMA to create a propensity for good corporate management. The artificial nature of a company demands that the personalities of the directors as alter ego of the company should be propitious to successful operations of a company.